Medical Billing Services must pursue underpayments
Seven to over ten percent of your practice’s revenue is being lost if your medical billing service is not systematically comparing your insurance payments to the amounts allowed in your payer contracts. Any competent medical insurance billing service should offer this feature as part of their standard service.
If you make the decision to outsource medical billing or are currently outsourcing, then there are a number of critical tasks and process steps that your medical billing service should provide. These include scrubbing claims before they are submitted, systematic follow-up on submitted claims, posting denials, pursuing underpayments, using patient expected payment scores just to name a few.
Pursuing underpayments is the focus of today’s article. This pursuit begins first and foremost with comparing the payment information from EOBs to the allowables outlined in the practice’s payer contracts. This comparison must be done in an automated manner and cannot rely upon payment posters catching the underpayments on their own.
The need for automated comparison to allowables is not because of any short coming with the average payment poster, but because payers employ sophisticated techniques to make underpayments difficult to identify. Medical billing companies with well designed processes can counteract these techniques because they have much more scope than a single medical practice. By scope I mean that they see what payers do across multiple providers in multiple states. This broader view of the world allows a billing company that is leveraging its scope to uncover payer behaviors more easily than a single medical practice.
A disturbing pattern that can regularly be seen by a medical billing company that is paying attention is one where a payer will select a set of procedures and underpay this set of procedures across a large number of providers (often by the same amount). This will continue for about 30 days and then the payer will resume paying the procedures at the correct amount and begin underpaying a whole new selection of procedures.
Although the amount of the underpayments may be small ($5 to $15), the totals can be quite large: upwards of a 10 percent net reduction in the payments the payer sends the practice. Despite the magnitude of the total, the constant hopping from CPT to CPT for underpayments and the relatively small amount of the underpayment on any individual claim makes the loss of revenue hard to spot - let alone pursue.
The pattern outlined above is why it is critical that a strategy for pursuing underpayments is not based upon payment posters picking up on the underpayments. Most payment posters will notice a large underpayment, but it is too much to expect them to spot a $5 underpayment.
This single action (comparison of payments to allowables) can increase a medical practice’s collections by 5 to 10 percent. This is why you need to insure this critical step is being completed by your medical billing service.
After the underpayment has been noticed it must be relentlessly pursued - this is what actually leads to top line improvement for your practice. Even the small underpayments cannot be ignored - to do so will invite larger and more frequent underpayments. Payers are constantly testing their boundaries. If they see that you respond at the first sign of stepping across the boundary they will quickly fall in line and pursue less vigilant targets.
Copyright 2008 by Carl Mays II